If you have ever been to a military base, you’ve likely noticed just outside the main gates a line of used car dealerships clear to the horizon. Just before a deployment, there’s always that one red muscle car for sale, a neon-yellow NO CREDIT? NO PROBLEM! sign on the windshield, and just after deployment, some private first class who is driving it now.

These businesses gravitate to military installations because 18-year-olds are inexperienced at both life and finances. They are too young to have ever before made a big purchase, and for the first time, they’re on their own. The interest rate is fifteen points too high, the fees are astronomical, and the terms tilt entirely in the lender’s favor: pay your loan late? Penalty. Pay your loan early? Penalty! But the Army doesn’t go around recruiting middle aged accountants: if you’ve never bought a car before, how do you know which fees are criminal and which are fair? The paperwork looks official, so it feels safe to sign the dotted line.

In the end, the car always turns out to be a lemon and the warranty nonexistent, but don’t worry: if you can’t afford that new transmission, there’s a payday lender just down the road who can help you out… and then the real trouble begins.

The Military Lending Act was signed in 2006 to protect service members and their spouses from predatory financing. The Consumer Financial Protection Bureau explains that the act caps loans at 36-percent; it protects service members from signing away their rights under consumer protection laws; it forbids mandatory payments deducted from paychecks; and it eliminates early-payoff penalties. In short, it protects service members from loans essentially designed to accumulate penalties and fees, and aimed at a young and brash but sometimes naive demographic.

According to documents obtained by National Public Radio, some of those protections might soon disappear. The auto industry has lobbied hard for a more generous interpretation of the Military Lending Act, and the Trump administration has been listening. The administration, according to NPR, has sent a revised policy to the Defense Department for review. This policy allows lenders to roll questionable fees into loans. Moreover, the Consumer Financial Protection Bureau is set to lessen oversight of payday lenders. These changes haven’t yet been put into force, but if they are, security clearances will be at risk.


Financial problems are the primary reason that workers and service members to lose their security clearances. Guideline F of the adjudication guidelines states: “Failure or inability to live within one’s means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual’s reliability, trustworthiness and ability to protect classified information.”

According to Kel McClanahan, an attorney and the executive director of National Security Counselors, an applicant’s financial history plays a pivotal part in a clearance adjudication. “Anything that increases your chances of being out of your depth in debt is bad,” he says. Large levels of debt might make you more willing to get on a foreign entity’s payroll. Conversely, an unexplained source of income might mean you’re already taking bribes. With national security at stake, the government isn’t giving those with questionable finances the benefit of the doubt.

Moreover, the government can be capricious when deciding Guideline F cases. “It can be: you are too much in debt for our liking,” says McClanahan. “Not because you have defaulted on your loans. Not because you are living beyond your means. Not for anything that you did wrong.” One can be denied or stripped of a clearance based on nothing more than the fact that he or she has incurred debt through lawful means and it is more than adjudicators are comfortable with.

Which is why consumer protection laws like the Military Lending Act are so important for clearance holders. The economy grows and contracts. Unexpected expenses sometimes appear and make life difficult. Keeping one’s financial house in order can be tough even when the rules are equitable and the lenders legitimate. Predatory lenders have a vested interest in debtors getting behind on their bills. An unscrupulous car dealer can sell a car for an absurd price and with grossly inflated fees, and when the service member fails to make payments, can repossess the car, sue the service member for the remainder of the loan, and meanwhile sell the car to someone else to begin the cycle anew. Service members are being set up to fail. And the problem doesn’t just go away. If he or she loses a security clearance because of debt, it not only limits his or her plans while wearing a uniform, but also pretty much kills any chance of getting a job with a defense contractor after an enlistment is up.

For that reason, if you hold or intend to hold a clearance, McClanahan advises prudence in financial matters. “Before you get in debt, have an articulable plan for getting out of it,” he says. People who are at risk of losing a clearance may salvage their chances by providing a road map for how they intend to get back into the black, he says, provided there is a documented history of active payments toward that goal. “It’s up to the judge, but the one piece of advice about finances for clearance holders is even if your plan is to get money from mom and dad back in the Hamptons, have something that you can say for how you plan to pay a loan back—something that doesn’t involve bankruptcy or winning the lottery.”

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David Brown is a regular contributor to ClearanceJobs. His next book, THE MISSION, will be published later this year by Custom House. He can be found online at https://www.dwb.io.